Fugro reports positive year despite ongoing pandemic impacts

Fugro has reported a revenue increase of 5.8% for the financial year 2021 compared to 2020, accompanied by a 21% revenue increase from renewables, led by buoyant offshore wind activity levels.

EBITDA for the full year increased to €175.6 million, said to be driven by improvements in Europe-Africa and Americas, resulting in an EBIT margin of 4.3% compared to 3.5% in 2020.

Results in the marine and land asset integrity business lines were higher in all regions. Operations were still impacted by the pandemic, particularly for cross-border projects in Asia Pacific in combination with lower government cost compensation, and low activity levels in Middle East & India, which resulted in marine and land site characterization margins declining, Fugro said.

As a result, Fugro generated a positive net result of €71.1 million driven by improved EBIT, net finance expense and income tax.

Capex amounted to €79.7 million, in line with €81.2 million in the previous year. Net debt was €292.7 million as of 31 December 2021 compared to €368.4 million at half-year 2021.

In the fourth quarter of 2021, revenue growth of 24.8% was supported by all regions, business lines and market segments. EBIT margin was 4.3% compared to 1.1% in the comparable period in 2020 as a result of improved performance in the Americas and Middle East & India, in particular in marine.

Fugro’s 12-month backlog grew by 11.6% to €1,014.1 million, which is said to represent the largest increase since the end of 2018, and was supported by all business lines in all regions.

“We delivered a clear improvement in our results. The margin was up, in particular in Europe-Africa and Americas, and we generated a positive free cash flow and a positive net result. We won numerous exciting new projects, including follow-up contracts for Denmark’s Energy Island, multiple wind farm site characterisations on the east coast of the US and several investigation works in support of the future Hong Kong-Shenzhen Innovation and Technology Park,” said Mark Heine, Fugro’s CEO.

According to the company, buoyant offshore wind activity levels led to a 21% growth in renewables, with numerous projects executed in Europe-Africa, Americas and Asia Pacific. In Q4, oil and gas revenue increased in all geographies, while for the full year it was down everywhere except in Europe-Africa.

In the marine segment, vessel utilization was 72% compared to 66% in 2020.

Asia Pacific was the region that sustained the largest impact from higher Covid-19 related mobilization costs and delays. This impacted in particular the site characterization business lines.

For 2022, Fugro expects an increase in revenue in offshore wind, infrastructure and water markets, plus modest growth in the oil & gas market, resulting in overall continued revenue growth.

The company is also focused on further margin expansion towards its 2023-2024 mid-term targets of an EBIT margin of 8-12% and a free cash flow of 4-7%, on the back of higher pricing, increasing asset utilization, disciplined cost management, operational excellence and digital transformation.

“The positive market outlook reinforces our Path to Profitable Growth strategy. On the trajectory towards our mid-term targets, our 2022 management agenda is focused on the following topics: further implementation of our digital transformation, innovation and sustainability agenda, excellence in commercial and operational delivery; another step-change in safety and employee engagement and the roadmap to reach our net zero carbon emission ambition by 2035,” Heine concluded.

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